Western Energy Services Corp. (TSX: WRG) has entered into an arrangement agreement with Savanna Energy Services Corp. (TSX: SVY) to acquire all of the issued and outstanding common shares of Savanna in exchange for common shares of Western. Savanna shareholders will receive, for each Savanna share held, 0.85 of a Western share.
The transaction value, based on Western’s 20-day volume weighted average trading price (VWAP), is approximately $533 million, including the assumption of approximately $248 million in Savanna net debt, including estimated transaction costs.
Shareholders of Savanna, including the Alberta Investment Management Corporation (AIMCo) as well as the directors and executive officers of Savanna, holding approximately 13.1% of the outstanding Savanna shares, have entered into lock up agreements to vote in favour of the transaction.
Shareholders of Western, including all directors and senior management, holding approximately 14.4% of the outstanding Western shares, have entered into lock up agreements to vote in favor of the issuance of the Western Shares.
Western has received a commitment letter from certain of its lenders and expects to receive further commitments for a revised credit facility that will be available on closing to fund the larger, more diversified combined entity.
Western has received consent from AIMCo to maintain the $200 million Second Lien Credit Facility upon closing of the transaction with no material changes to the terms and conditions of the facility, including the December 31, 2021 maturity, subject to the satisfaction of various conditions at or prior to closing.
AIMCo exercises control or direction over approximately 14.7 million Savanna shares and 7.0 million common share purchase warrants. Upon closing, the unexercised common share purchase warrants will be converted to Western warrants at the applicable exchange rate.
Raymond James Ltd. is acting as exclusive financial advisor to Western with respect to the transaction. Blake, Cassels & Graydon LLP is acting as legal counsel to Western.
Peters & Co. Limited is acting as financial advisor to Savanna.
photo credit: Savanna Energy Services